Biz Break: Intel sells its set-top TV foray to Verizon

By Jeremy C. Owens and Mike Murphy

Mercury News

Posted:
01/21/2014 02:22:28 PM PST

Updated:
01/21/2014 03:07:23 PM PST

Today: Intel's (INTC) effort to battle TiVo and others for control of American living rooms ended, when the chipmaker announced it is selling a division sprouted to develop a set-top box for televisions to cable operator Verizon. Also, AMD beats expectations but predicts slower growth, while Google (GOOG) hits another record high.

The lead: Intel sells OnCue to focus on core products

Intel's effort to battle TiVo and other Silicon Valley companies for control of American living rooms ended Tuesday, when the chipmaker announced it is selling a division sprouted to develop a set-top box for televisions to cable operator Verizon.

The companies did not announce an acquisition price for Intel Media, though Bloomberg News reported that Verizon paid less than $200 million, based on two anonymous sources. The division launched in 2011 to focus on offering an a-la-carte option for television content, with live shows and previously shown content easily accessible through one, Internet-based component. After reportedly striking out in efforts to line up deals with content providers, however, Intel will turn the project over to a traditional cable company that already has those connections.

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"The critical factor in gaining efficient access to content is based on your ability to scale quickly in subscribers and end users, which is why selling these assets to Verizon makes perfect sense, with its millions of FiOS network and wireless customers," Intel CEO Brian Krzanich said in Tuesday's announcement.

Huggers said at the time that Intel was seeking to offer "a bundle that can be curated by the consumer," with the set-top box likely containing a camera that would recognize users and gestures; Intel acquired Israeli gesture-recognition company Omek Interactive in July, a move thought to be related to the Intel Media effort.

"We're experts in silicon, we're experts in mobility, in driving Moore's law," Krzanich said then, "but we are not experts in the content industry and we're being careful."

Intel built up the team behind Huggers to roughly 350 employees, and those workers will be offered employment with Verizon to stay in Santa Clara under the management of the current team, the companies said in Tuesday's news release.

"The OnCue platform and team will help Verizon bring next-generation video services to audiences who increasingly expect to view content when, where and how they want it," Verizon CEO Lowell McAdam said in the news release.

Several Silicon Valley companies have sought to disrupt the traditional cable industry in the ways content is delivered to consumers, with TiVo's digital-video-recorder technology eventually being accepted by the industry and Netflix's (NFLX) streaming service still considered a rival. Apple (AAPL) has offered its Apple TV set-top dongle for many years, with rumors of a full TV set or more involved offering around almost as long, and Google has moved from its smart-TV effort to Chromecast, which allows users to beam streaming services directly to a television.

Intel stock dropped 1.01 percent to $25.59 Tuesday. The world's largest semiconductor company announced last week that revenues declined in 2013 from 2012's total and predicted little to no revenue gains in 2014.

Stocks had a mixed day on Wall Street, as afternoon gains mostly made up for morning losses. The tech-heavy indexs made the biggest gains, with the Nasdaq up 0.67 percent and the Silicon Valley 150 up almost 1 percent.

Shares in Sunnyvale chip maker Advanced Micro Devices plunged after hours, following an earnings report that beat expectations but projected future declines. For the fourth quarter, AMD reported revenue gains of 38 percent year-over-year, to $1.59 billion, or 6 cents a share. Analysts had forecast gains of $1.54 billion, or 5 cents a share. However, AMD CEO Rory Read warned of $1.34 billion in revenue in the upcoming quarter, a 13 percent drop-off. After closing the day down just 0.24 percent, to $4.17, shares sank more than 9 percent, as of 3 p.m. (Pacific), in late trading.

Apple gained 1.55 percent, or $8.40, to $549.07, after receiving a reprieve from oversight by its court-appointed antitrust monitor. The monitor was ordered last summer, after the Cupertino tech giant was found liable for conspiring to raise e-book prices. Apple says the monitor is too intrusive, too expensive, and claims his activities could hinder the company's ability to develop new products. An appeals court Tuesday granted Apple's request to block the monitor while it readies an appeal.

Milpitas network security company FireEye fell 5.61 percent, or $4.13, to $69.44, after JPMorgan analyst Sterling Auty downgraded its stock from "neutral" to "overweight." While Auty said FireEye shares were rising too high too quickly, he expressed confidence in the company's long-term plans, and raised the company's price target from $64 to $75. "We still consider FireEye to be the most disruptive name in security and it should continue to show significant upside to current estimates, but at these price levels we believe the valuation is factoring in the majority of that opportunity," Auty wrote in a note.

San Mateo-based solar panel installer SolarCity eked out a 0.04 percent rise, or 3 cents, to $75.14, despite also receiving a downgrade from JPMorgan, from "neutral" to "overweight." Analyst Paul Coster wrote that the company's risks offset its potential: "We believe that fundamentals remain constructive . . . however, at this price level some of the exogenous risks come into focus including rising interest rates, competition and growing opposition to distributed solar from utilities."

Google closed at another all-time high, and at least one analyst believes it won't come back down anytime soon. Pacific Crest analyst Evan Wilson raised Google's price target from $1,135 to $1,450 a share on expectations of significant growth in 2014. Shares in the Mountain View tech titan rose 1.14 percent, or $13.17, to $1,163.70.

And the widely watched Standard & Poor's 500 index: Up 5.10, or 0.28 percent, to 1,843.80

Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.